In making decisions about how to proceed in a separation, it is crucial to have an understanding of how the Court divides the property of a relationship, and what types of things it will consider in arriving at what it views as being a just and equitable settlement of assets and liabilities.
A key feature of the Court’s approach is working out each party’s contributions to the relationship’s assets. It recognises three types of contributions being Direct Financial Contributions, Non-Financial Contributions and Indirect Financial Contributions.
Direct Financial Contributions
First, the net property of the parties available for division must be identified and valued. Direct financial contributions are monetary contributions to the relationship. The Court considers who made the contribution and when it was made. Direct financial contributions include things like earnings, any money each party had at the start of the relationship, lotto winnings, any interest in a partnership, shares in private and public companies, certain types of interests in Trusts, vested interests in estates and options to purchase.
The Court also takes into account non-financial contributions. Non-financial contributions are those that have increased the net asset pool, but were not direct financial contributions. For example, if one spouse paints the family home, this increases the value of the property and therefore the value of the net asset pool, but the increase is not the result of a payment or purchase. As a result this will be considered a non-financial contribution. To assess the value of the non-financial contribution the court will consider the value that the contribution has added to the net asset pool and/or how much it would have cost to hire someone else (a professional) to complete the same task.
The Court will also take into account indirect or ‘homemaker’ contributions. Domestic duties are considered an indirect contribution to the relationship if they allowed the other spouse to make direct financial contributions. The Court takes into consideration which party performed what duties. For example, if a one spouse stays at home to raise children, and this allows the other to work and contribute financially to the acquisition of assets, the first partner is seen as having indirectly contributed to the property pool. Indirect contributions by a spouse can also include a relative of that spouse gifting money or providing non-financial contributions to the relationship. It is difficult to put a specific monetary value on non-financial and indirect contributions, but the Court takes these contributions very seriously when dividing the asset pool and determining whether there should be an adjustment in favour of one party or another. The upshot of this is that although the value of various indirect and non-financial contributions is crucial and will likely be a determinative point in working out what you are likely to be entitled to, it is very difficult to assess without significant experience of the Court’s approach to them.
Once the relationship’s asset pool has been determined and each party’s contributions have been identified and valued, the Court then looks at a variety of other other factors, including the parties’ age and health, the current income earning ability and capacity of each of the parties, and their mental and physical capacity for gaining employment, the length of the marriage and how it has affected each party’s earning ability and whether either party has care of a child under 18 – the age and number of children are also relevant. The Court may attribute varying weights to each these factors and adjust the split of property as it sees fit. There are no definite rules in regards to making these adjustments, as the specific facts of each case will affect how much weight is given to each factor and what adjustments (if any) should be made in a party’s favour.
To better understand how the different types of contributions and other factors are considered in a property division in relation to your matter, it is helpful to have the assistance of an experienced family lawyer. The different factors and the way percentage adjustments are made can be confusing and unpredictable, so an experienced professional can provide invaluable insight into their effect on the outcome of your matter, what your options are, and how to proceed to ensure a fair outcome.
The content of this article is intended to provide a general overview of the subject matter and is not be relied upon as giving legal advice. Specialist advice should be sought about your specific circumstances.